In the latter half of 2009, it seemed that the economy might be stabilizing. However, with double-digit unemployment in several of our jurisdictions, we expect economic growth for the next few years to be anemic. Our 2009 year-end results and our current economic projections lead us to a 2010 earnings outlook range of $1.25 to $1.30 EPS on an adjusted diluted basis. This range puts us on track to grow long-term adjusted diluted EPS at a compound annual growth rate of 4 to 6 percent, from a 2009 base year.
In 2010, we will need to fund about $3.5 billion to complete our construction programs and address the negative cash flow impacts of the ongoing economic downturn. Externally, we expect to issue approximately $2.3 billion in new debt securities and raise approximately $400 million of new equity through our DRIP and other internal stock plans. The remainder will come from the utilization of cash we realized from prefunding some of our 2010 financing needs in 2009. The equity we plan to issue will help maintain our strong balance sheet.
We are committed to growing the dividend, but at a slower rate than our growth in earnings. Over time, our payout ratio will trend downward to levels more consistent with our industry peers. Subject to board approval, we estimate a 2 percent dividend increase in 2010.
Frequently Asked Questions
Q: How will Duke Energy maintain its financial strength?
A: Our financial objectives include growing our earnings and dividends, allocating capital efficiently and earning competitive returns, while maintaining the strength of our balance sheet. Our financial strategy supports our historical focus of providing affordable, reliable and increasingly clean energy to our customers, while earning good returns for our investors.
Q: How do you balance short-term economic pressures with the long-term investments needed to meet the needs of your customers, and achieve business growth?
A: We achieve that balance by maintaining flexibility in our allocation and spending of capital. In 2010, about $3 billion is committed to building our two cleaner-coal plants and two gas plants in our regulated operations, and renewable wind and solar projects being built under long-term contracts in our commercial businesses. About $2 billion is allocated for customer additions and maintenance costs. In the short term, we have some flexibility on the timing of this spend.
We have the greatest flexibility in allocating our discretionary capital. Our 2010 plan includes $200 million of growth capital that has not yet been designated to specific projects. Additionally, we have broad ranges for discretionary spending in 2011 and 2012, the years in which we will be deploying more capital to complete the fleet and grid modernization projects in our regulated operations. As we demonstrated in 2009, we have the flexibility to increase or decrease this discretionary spending as the environment dictates.